WASHINGTON, D.C. – Sen. John Kerry today released the following statement on the House of Representative’s 263-171 passage of legislation to prevent taxpayers from being hit by the financial meltdown on Wall Street:

“This has been a volatile time for our financial system and our economy,” said Sen. Kerry. “This legislation will help restore the strength and stability of America’s financial system and overall economy. This plan is designed to stop the ripple effect of the collapse of Wall Street’s major financial institutions from developing into an economic Tsunami sweeping across the country. I commend both chambers of Congress for coming together to enact legislation to protect our vital national interest in the continued health of our economy.”

Notably, the bill included Sen. Kerry’s provisions to prevent hedge funds from deferring compensation offshore and to freeze giveaways for Big Oil.

The first provision was introduced in response to news accounts of U.S. hedge fund managers deferring billions of dollars of compensation offshore. Earlier this Congress, Senator Kerry and Rep. Emanuel introduced legislation to prevent U.S. taxpayers from deferring compensation in offshore tax havens. The closing of this loophole would raise $25 billion over 10 years. The top fifty hedge fund managers earned a total of $29 billion last year.

Most Americans can defer income through a qualified retirement (e.g. 401k) and individual retirement account (IRA). In 2008, an individual can defer up to $15,500 in income into a 401(k) or similar accounts, and an additional $5,000 in an IRA. By contrast, U.S. based hedge-fund managers who operate offshore investment funds can defer unlimited amounts of their compensation. While the deferrals technically comply with current law, there are clear inequities in the amounts that middle-class American can defer through mainstream tax incentives for retirement and what high-income Americans can defer through offshore corporations. The Alternative Minimum Tax Relief Act of 2008 would require offshore deferred compensation to be included in income on a current basis.

The second provision freezes the domestic manufacturing deduction for oil and gas income at 6 percent, raising $5 billion over ten years. Currently, the 6 percent rate is scheduled to increase to 9 percent in 2010. The second quarter of 2008 saw over $44 billion in profits for oil companies and executives. In the nearly eight years of the Bush Administration, the “Big Five” international oil companies have seen $647.5 billion in profits. Senator Kerry introduced legislation in both the 109th and 110th Congress to scale back the manufacturing deduction for oil and gas companies.

###